For the past several months, I have had the opportunity to discuss the issue of biopharmaceutical affordability in a variety of settings, including state legislative hearings. The collective inquiry from policymakers is: how do we help patients reduce their out-of-pocket costs at the point of sale at the pharmacy counter NOW? The answer is simple — share the savings.
It is important to note that if we were to forgo rebate contracting and instead institute net price contracting, we wouldn’t need to institute pass-through savings at the point of sale. Net price contracting is utilized successfully by Kaiser Permanente and was proposed as an alternative contracting methodology in the now withdrawn HHS rebate rule.
If moving away from rebate contracting is not an option, then we should allow patients to pay their co-insurance or deductible based on net price. This would allow patients to benefit from the savings that were negotiated on their behalf. Biopharmaceuticals are the only segment of the health care system where patients do not benefit from the prices negotiated on their behalf by their insurers or pharmacy benefit managers (PBM).
The typical criticism noted by insurers and PBMs is that such a move would significantly increase premiums for all patients. This conclusion is refuted by actual insurer data from the State of California. For the second year in a row, the California Department of Managed Healthcare concluded that the impact of rebates on health care premiums was less than or equal to 1.5 percent. A number that is below the annual U.S. general inflation rate for the past five years.
The question then becomes to what extent would patients benefit from a pass through of savings at the point of sale. Two recent studies help answer this question. The first study was published by the University of Southern California, Schaeffer Institute in March. In the study, the researchers found “that basing cost-sharing on net price would reduce out-of-pocket spending for about 47 percent of beneficiaries (in Medicare Part D) who do not receive low-income subsidies … approximately 20 percent of beneficiaries would save more than $100, and almost one percent would save more than $1,000 annually.”
Fortunately, besides modeling data, we now have real-world evidence of the extent to which patients may benefit from this policy change. Last year, Optum, a PBM and part of the United Health Group, released data regarding their prescription drug discount program. Optum concluded that for self-funded employer customers, when negotiated prescription plan discounts are passed on, patients saved an average of $130 per eligible prescription. In addition, prescription drug adherence improved by up to 16 percent. In other words, patients paid less out of pocket and were more compliant with the medications that they were prescribed.
Some state policymakers are paying close attention to the data. In 2019, several states including Nevada, Georgia and Indiana introduced legislation to ensure that the rebates and other concessions collected by PBMs or insurers end up in the patient’s pocketbook or passed on to the plan sponsor.
In view of today’s changing economic outlook, one of the highest priorities for any federal or state policymaker should be to reduce out-of-pocket spending by patients. Policymakers should avoid gimmicky policies that will potentially harm long-term access to innovative therapies and instead consider policies that directly help patient affordability. The policy of allowing patients to realize the savings negotiated on their behalf at the point of sale can be instituted immediately by the federal government for Medicare patients and by states for their state employee and retiree programs. It is time to align pharmacy benefits with what is typical for hospital, dental, optical and physician benefits. It is time to share the savings with patients.
Robert Popovian is the vice president of Pfizer U.S. Government Relations.
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